Solar Panel Year 3 Update and Tesla Solar Roof

Three years ago, we installed solar panels on our house and since then we’ve been doing annual reports on how it’s been going. It’s time to do a check-up again to see how much solar juice we’ve been able to convert into excited electrons that in turns pays us cold hard cash.

Check out our previous posts if you want to follow the story from the beginning.

So how did the solar panels do in their third year of operation? Let’s take a look at the numbers.

Solar Panels Third Year Numbers

Total Generated

Monthly Average

Annualized Rate of Return

July 2016 – June 2017

$724.99

$60.42

7.6%

July 2015 – June 2016

$698.72

$58.23

7.4%

July 2014 – June 2015

$699.46

$58.29

7.4%

Amazingly, the amount we earned from our solar panels went UP slightly this year. With solar panels expected to decrease in efficiency over time, I’ve been bracing myself for a reduction rather than an increase. It might be a one-time fluke, but I believe there are several reasons for the increase in year three.

Electricity Rate Increase: In the past 12 months, our base electricity rate increased by approximately 0.4 cent per kWh. Since the price of the power we generate and sell back to the grid is pegged to the going rate of electricity (along with a 4 cents premium on top of that), as it goes up, so does our return. In this case, the electricity rate increase alone effectively increased our returns by around 3%. But that wouldn’t able to account for the full increase in earnings this year since 3% over last year’s earnings would still leave us under $60 for our monthly average.

Weather Cooperation: Our area suffered through a period of drought last summer (well, as far as droughts go here in the rainy south, I suppose) and so we had more sun during many of the longer days of the year. Nevertheless, as I’ve mentioned in previous solar panel updates, summer haze, heat, and clouds (we still had plenty of all three despite the drought) can drastically reduce solar production. So while we had higher production, it wasn’t like Arizona-level production.

Lower than Expected Panel Degradation: Our solar panels are guaranteed by the manufacturer to still be able to pump out 80% of stated capacity in 20 years. (The salesman told me that his experience was that they hold up much better than that.) In my mind, I assumed that the degradation curve wouldn’t be straight, but a bit more exponential with the greatest reduction in capacity occurring in the early years. So far, my assumption hasn’t proven correct. While I have seen some reduction of peak capacity (we used to have many days producing over 20 kWh where we seldom get those now), it doesn’t seem to be dropping off as precipitously as I had cautiously planned on. The steep drop-off might still be coming, or the salesman might be right. We shall see.

Cumulative After 3 Years

So let’s take a look at the total that we’ve earned so far in the first three years of the system.

Cost of system: $9,500

Total Earned: $2,143.02 (this number includes $19.85 that was earned in the partial month that the system was operational when it first went online)

Total Return on Investment: 22.6%

Annualized Rate of Return: 7.5%

So we are nearly a quarter of the way through paying off the original investment, and at this rate it will be about 13 years total to pay it off, not including the appreciated value of our home. As we’ve mentioned before, it’s not a jaw-dropping return by any means, but it’s worked out nicely for us since it’s a tax-free investment and one that immediately reduces our monthly cash flow needs. It’s one of the factors that enables us to have a much lower monthly budget—essential when we’re a growing family on one income.

Some Thoughts on the Tesla Solar Roof

Some of you already know that I’m a bit of a Tesla fanboy, and one who’s always keeping up with the latest innovations they’re concocting. So naturally, I’ve been very interested about their solar roof.

Seeing that I’m not in the market for a new roof anytime soon (at least I hope not!), I haven’t expended much energy in crunching my own numbers other than running through their cost estimator.

The results I got when I plugged in numbers for my house.

A few quick thoughts:

Their roof is crazy expensive! With the Powerwall they recommend, we’re looking at over $54,000!

Even with the electricity savings, tax credit, and all the assumptions that aren’t clearly shown in their estimator, it still doesn’t pay off compared to a traditional roof. The traditional roof costs only around $9,000 by their own estimate, while the net cost of the solar roof over 30 years is still nearly $17,000.

Of course, their estimates include a Powerwall battery pack that can power the house—something that my system doesn’t have—but even with that cost removed, it still doesn’t tilt the cost in their favor enough to make it cheaper than a regular roof.

It seems to me that if I’m looking at maximum bang for my buck, I’m much better off installing a new traditional roof and adding regular ol’ solar panels on top. Of course, it just won’t look as purdy. 🙂

Relevantly, a footnote called “Installation Timing” offers this interesting tidbit: “Installations will start in June, beginning with California and rolling out to additional markets over time. When Solar Roof is rolled out in a particular market, Solar Roof customers will be installed based on when their order was placed.” Might be a while before they end up in Tennessee!

Looks like no Tesla Solar Roof for me!

Obviously, this estimate is based on my location and my home. Your mileage will certainly vary. (Especially if you live in California!) But my guess is that since the Solar Roof and Powerwall are new technologies, prices will be on the decline for the foreseeable future. Perhaps when the time truly does come when I need a new roof, the prices will make more sense to consider it more seriously, and maybe they’ll be available in my state by then. In the meantime, I’ll happily continue to collect my check from the electric company every month.

Comments

It’s great to hear that you’ve having a great experience with the solar panels. I got in touch with a couple of solar companies but haven’t decided on it yet. The startup cost is a bit daunting, but as you pointed out, it might be worth it in the long run!

Yes, solar panels have a steep upfront commitment, and it may not be a good option for everyone. One of the big variables that I have observed is that the incentives to get people to jump onto solar seems to be phasing out to the point where it’s not likely to pay back. Even in my area, the year after I installed my system, the premium the power company pays back got drastically reduced so if I had delayed a year, it probably wouldn’t have made sense to go solar. So definitely crunch the numbers for your own individual situation!

Our prices will be somewhat different since I’m from Australia. I got solar panels (6kw) put on in 2013 and wish I had kept track of the savings since then like you have as it would have been interesting. But it was 12k in total to get it up there, and since our electricity provider have cut back on the price for solar rebate, the time of negative power bills during summer is no longer. Which is really sad to say the least. On average I’m still paying around $2-3k per year for electricity.

We actually use less power than we generate during summer, but because we have no way of storing it we sell it back to the grid and end up using grid power at night. It doesn’t balance out as we pay so much more for grid power. I am currently looking into getting the Tesla battery installed (~$10k or so for us) but am so hesitant too because it’s already going to take us around 15 years to get our solar panels back, it’s going to take even longer if I add the battery on top of that. I love solar, but at this point – it feels like a money sink!

It’s true, solar doesn’t always pay for itself. A lot depends on the incentives, rate of electricity, the buy-back rate, and a lot more. Even here where I am, they have phased out any premiums for the electricity they buy back, so it wouldn’t really pay if I were to install solar panels now.

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Meet Deb & Al

She's a bargain hunter and he's a numbers nerd. Together we're a husband and wife team who believe that by living an intentionally frugal life, the door flings open to a truly fulfilled existence. Read More…

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